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Abu Dhabi, UAEThursday 20 September 2018

Retailers may be only winners from Hurricane Harvey

Home improvement retailers, well versed in the business of disaster, are probably steps ahead of most companies

Residents face the task of rebuilding homes and lives after Hurrican Harvey.  Darren Bate / EPA
Residents face the task of rebuilding homes and lives after Hurrican Harvey. Darren Bate / EPA

Days before Hurricane Harvey barrelled into the Texas coast on Friday, home improvement retailers were preparing truckloads of lumber, shingles and other materials that property owners in the storm-raked communities will need to rebuild.

The deliveries will have to wait, however, as 56 stores between Home Depot and Lowe's in south-east Texas remained closed as of Sunday amid widespread flooding. Once they reopen, the chains could be among the biggest beneficiaries of the post-storm recovery.

Lowe's has sent "500 truckloads" of supplies to the storm zone, its spokeswoman Sarah Lively told Reuters. "We are reopening those stores as quickly as possible."

For the moment, the biggest storm to hit Texas in 50 years is posing a major disruption to one of the most important economic crossroads in the United States and the heart of its oil industry. Ports, railways and motorways are closed or clogged, potentially blocking movement of key parts of the US manufacturing supply chain.

Catastrophic flooding triggered by now Tropical Storm Harvey inundated Houston on Sunday, forcing residents of the fourth most populous US city to flee their homes in anticipation of more days of "unprecedented" rainfall.

The home improvement retailers, well versed in the business of disaster, are probably steps ahead of most companies.

At Home Depot, the spokesman Matt Harrigan said preparations began "as soon as the storm was on the radar".

Both Home Depot and Lowe's said they have set up command centres to manage the response. Both companies also said they will freeze prices for lumber, roofing and other rebuilding materials for a time in the affected zone.

Other US companies, including cR makers, railroads and insurers, will probably be trying to send investors similar reassuring messages as trading starts the week.

Texas is a significant vehicle market, particularly for highly profitable pickup trucks built by the big three Detroit car makers.

In the short term, the storm will hamper operations at dealers and could dampen August sales. But longer term, "it seems there has been enough flooding to damage thousands of light vehicles that will need replacing", said Nick Colas, an independent analyst based in New York City.

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For insurers, the storm could be a mixed blessing.

"Insurers - from a long-term point of view they can raise their rates, but some insurers, if they have a particular geographic or sector concentration can get really beaten up," said Michael Purves, the chief global strategist at Weeden & Co.

"Maybe the winners are the companies that have the least damage but the most licence to increase their premiums."

It was not clear on Sunday how the storm would affect supply chains for car makers and other manufacturers that depend on goods flowing to and from northern Mexico.

Ford Motor, General Motors and Fiat Chrysler Automobiles said on Sunday they had thus far not seen any impact or issues with getting parts across the storm zone but were monitoring the storm closely. The area of Mexico south of the storm zone is a major centre for car parts manufacturing.

BNSF Railway and Union Pacific told customers they would probably curtail operations in flooded areas.

The storm has led to record flooding across Houston. Elected officials, meteorologists and emergency managers all say there has never been anything like this there, and the downpour could last for days.

“Houston has another 100 hours of this,” Todd Crawford, the chief meteorologist at The Weather Company in Massachusetts, told Bloomberg. “Words really can’t express the impacts this will have, when all is said and done. There is no historical comparison. It is simply a tragedy of epic proportions.”

Harvey smashed ashore near Rockport, Texas, Friday as a Category 4 hurricane. As the winds subsided Sunday to about 64ph, from 180kph earlier, rain and flooding took over as the main threat from the storm. As much as 25 inches of rain had already fallen by Sunday and another two feet is possible, the National Hurricane Center said at 5pm New York time.

The National

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